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Invoice tracking and bill management go hand in hand as you may have guessed because you need the income to cover your bills. If revenue is late and you do not have reserves built up, you may pay your bills late.
Build up reserves to make it easier to wait on receivables. Even those that earn $100 thousand plus a year in income must wait on receivables to pay bills. Monetary reserves will help to tide you over by tucking away the profit. Yes, profit. Consider only paying out profit at the end of the quarter, every six months or the end of the year.
Business is a cycle as business owners we sell, but we are also consumers as we have to buy from others to produce the product and services that we sell. As the business owner on the sells side of things, we often are afraid to collect our payment or to say our sales price. I remember, as a new business owner, I wanted to offer low pricing, but I quickly realized that I had to choose between quality and prices. Offering lower than market pricing sounds good until you realize you can't make a profit. I transitioned into quality package services and looking at the big picture for my clients while building out the details.
As I build up my pricing plan and help my clients, I also work to make sure I pay my bills on time. My receivables are due before my bills. So I don't have to pay the bills late because without my vendor services, I would not have access to what I need to sell my products and services. I also plan out non-reoccurring purchases because I know my clients may have ups and downs, as well. Here's where the profit or business expenses markup comes into play. If you have enough in reserves, you can cover the slow months without harming your owner's pay or payroll. You need to cover your bills for personal living as well as running your business.